India: SC : Capitation Fee Charged By Private Colleges Is ‘Illegal'

Last Updated: 6 May 2016
Article by AMLEGALS  

Finally on 2nd May 2016 , 5 judge Constitution bench comprising of Justices A R Dave, A K Sikri, R K Agrawal, A K Goel and R Banumathi in the matter of Modern Dental College And Research Centre Vs. State of Madhya Pradesh [Medical Council of India] held that education is a noble profession.

Every demand of capitation fee by educational institutions is unethical & illegal. It emphasised that the commercialization and exploitation is not permissible in the education sector and institutions must run on 'no-profit-no-loss' basis.

It categoricaly held that

Though education is now treated as an 'occupation' and, thus, has become a fundamental right guaranteed under Article 19(1) (g) of the Constitution, at the same time shackles are put in so far as this particular occupation is concerned, which is termed as noble. Therefore, profiteering and commercialization are not permitted and no capitation fee can be charged. The admission of students has to be on merit and not at the whims and fancies of the educational institutions,"

It is to be ensured that this admission process meets the triple test of transparency, fairness and non-exploitativeness.

It also shown its concern on the quality of education which is deteriorating and students are compelled to look for private institutions

We cannot lose sight of the fact that these things are happening in our country irrespective of the constitutional pronouncements by this court in TMA Pai Foundation case that there shall not be any profiteering or acceptance of capitation fee etc.

The court stresed on the vital aspect that unreasonable demand could not be imposed on the students and their parents. Further it observed that the educational institutions can charge fees that would take care of various expenses incurred by them plus provision for the expansion of education for future generations .

The object of setting up educational institutions is not to make profit. There could, however, be a reasonable revenue surplus for development of education. For admission, merit must play an important role. The state or the university could require private unaided institutions to provide for merit-based selection while giving sufficient discretion in admitting students," the bench said.

Supreme Court while referring to the previous judgement of 2013 , proceeded with such conclusion that

Education is treated as a noble occupation on 'no-profit-no-loss' basis. Thus, those who establish and are managing the educational institutions are not expected to indulge in profiteering or commercialize this noble activity. Keeping this objective in mind, the court did not give complete freedom to the educational institutions in respect of right to admit the students and also with regard to fixation of fee.

While concluding that such demand is illegal and unethical, the Supreme Court also asked the Centre to make laws to put an end to such practices which ultimately deny admission to the meritorious students who cannt afford to such demands

Central Government, Ministry of Health and Family Welfare, Central Bureau of Investigation or the Intelligence Wing have to take effective steps to undo such unethical practices or else self-financing institutions will turn to be students financing institutions," it said.

Our View

The Constitution bench has laid down a landmark decision and it may bring educational reforms in education sector in india . Perhaps , the financial hardhsip will be curtailed for brights students of the nation .

The Supreme Court court focused on these aspects

  1. Education is a noble profession,
  2. Admissions process to pass triple test of transparency, fairness and non-ex ploitativeness ,
  3. Setting up an educational institutions must not be to make profit ,
  4. Students and their parents cannot be imposed with such demands of capitation fees
  5. Government must step in to regulate the sector to promote merit, curb malpractices and secure merit-based admission in a transparent manner

However, the observation that educational institutions can charge fees that would take care of various expenses incurred by them plus provision for the expansion of education for future generations may be a tricky factor and can be still exploited by such institutions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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